AbCap Expects Big Redemptions, Posts Loss

Sep 30 2008 | 9:26am ET

Troubled hedge fund firm Absolute Capital Management Holdings will see more investors than expected head for the door, it said today.

The Swiss-based firm, which is listed on London’s Alternative Investment Market, posted a €1.2 million loss for the first half, and said it would not recommend a dividend. The firm’s assets under management at the end of June were just US$884 million, down from US$3.25 billion a year ago, due to redemptions and poor performance as well as the demerger of its emerging markets credit division, Argo Group.

In July, AbCap Chairman Jonathan Treacher said he expected as much as €500 million in redemptions.

“While the performance of certain of our funds’ A class portfolios in the first six months has been encouraging, looking ahead, the group expects to have substantial redemptions from its funds at the end of the lock-up periods,” the firm said, due in part to the liquidation of its Absolute Activist Value Fund. It added that it would continue to monitor the viability of its other funds.

Last year, AbCap was rocked by the abrupt departure of co-founder Florian Homm and the revelation that Homm had put as much as a quarter of AbCap’s equity fund’s assets into highly-illiquid pink sheets. The firm then suspended redemptions, putting the illiquid assets into side pockets.

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